Fitbit (FIT)/Garmin (GRMN)

Please focus on the Statement of Cash Flows only and perform the following tasks: ? Please answer whether each company uses the direct or indirect method for determining cash flows. Once you have determined the foregoing, please write statement of cash flows for each company using the other method. How does cash flow revenues from operations compare with operating income on the income statements? How do you account for any difference? What are the major sources of operating, financing and investing cash inflows and outflows for each company? How do these influence each company's performance? Is cash flow from operations sufficient to retire debt, cover capital expenditures and pay dividends? What else strikes you as significant about the statements, and why?

? Evaluate the cash flow performance of each company using the analysis framework discussed in your text, Ch5, Section 4.1. ? Please perform common size analysis for both companies as discussed in your text, Ch5, Section 4.2. ? Please compute the free cash flow, cash flow performance and cash flow coverage ratios discussed in your text Ch6, Secs. 4.3-4.4, and the other ratios outlined in Ch6, Sec. 4.4, Ex. 16. Please discuss the relationships between the balance sheet, income statement and cash flow statement. How are they connected and otherwise interrelated? All things being equal, which is the most important to an analyst? Why?

Briefly describe the business models for each company selected. What is each company's greatest cash need? How does the way the company does business effect its cash flow position, both negatively and positively? How might it change its business practices to collect and use cash more efficiently?

Exhibit 14 Acme Corporation Common-Size Cash Flow Statement Year Ended December 31, 2018 INFLOWS PANEL A. DIRECT FORMAT FOR CASH FLOW Receipts from customers Sale of equipment Total $23,54 3 PERCENTAGE OF TOTAL INFLOWS 96.86% 762 3.14 $24,30 100.00% 5 OUTFLOWS Payments to suppliers $11,90 PERCENTAGE OF TOTAL OUTFLOWS 48.66% 0 Payments to employees 4,113 16.82 Payments for other operating expenses 3,532 14.44 Payments for interest 258 1.05 Payments for income tax 1,134 4.64 Purchase of equipment 1,300 5.32 Retirement of long-term debt 500 2.04 Retirement of common stock 600 2.45 Dividend payments 1,120 4.58 Total $24,45 100.00% 7 Net increase (decrease) in cash ($152)